.

Ok, let’s say you have now created your own personal compelling reason to attain your goal. You’re ready to get started with the second action step. What are the key elements in meeting your wealth-accumulating goal?

1. Your income must exceed your expenses

2. You will invest your excess funds

3. You will be patient and let the magic of compounding work

1. Your income must exceed your expenses: This is a simple mathematical statement. However for many people, this is the most difficult step to overcome on a consistent basis. It is all about your choices. If your income does not exceed your expenses, you have to make a choice. You will need to cut your expenses, increase your income or if you are really ambitious and have that ‘compelling reason’ to accumulate wealth, you’ll choose to do both. In my personal situation, I focused about 70% of my energy on cutting expenses & 30% on increasing my income. I decided to spend less on clothing, entertainment, dining out and I also cut coupons to help reduce grocery bills. I decided to live within my personal financial situation. I decided to spend less than I earned. Remember, you have a choice.

A. Do you have a compelling reason & discipline to accumulate wealth?

OR

B. Do you lack the discipline and have an immediate gratification need so strong that to satisfy your need, you need to purchase the newest fashion, go to all the home football games, dine out 4 nights a week, etc? It’s all about choice.

2. The second step to accumulating wealth is to invest your excess funds. You need to invest your excess funds to meet your personal financial goals. Investments can range from real estate, stocks & bonds, CDs or possibly investing in a small business. Whichever route you choose, create a systematic approach to investing, change direction if necessary, but don’t stop. Investment diversification is important to help ensure that you can ride through the normal up-and-down cycles of the stock market or the real estate market. Personally, I started with investing in a 401K, then stocks and bonds and eventually real estate. While other young people decided to spend all their weekly paycheck, I made a choice to first, put a few dollars away each week into a 401K and other investment vehicles. I ‘paid myself’ first and then I spent money on the other entertainment activities. See some of the investing books at the end of this article.

3. The last step is the magic of compounding. You’ll often hear the phrase, “The rich get richer.” While this phrase can mean different things in different situations; in the context of compounding it has a major impact. Let me share a few examples on how you can accumulate $1,000,000, based on average investment return of 10% (stock market average).

Let’s say you are 40 years old and you have $20,000 to invest. To accumulate $1,000,000 by the age of 65, you would need to contribute $567 per month.

If you’re 30 and have $5,000 to invest, you’ll need $218 per month to reach $1,000,000 by age 65.

Let’s say you are only 20 years old and you have no money to invest. You can start with absolutely $0 and still only have to add $94 per month to reach that same $1,000,000 goal by age 65.

Wealthy individuals understand the benefits of compounding. Here are examples that show how the rich get richer.

A. If you have accumulated $10,000 and your investments yield a fantastic 20%, you will have earned $2,000 for that year.

B. If you have accumulated $100,000 and your investments don’t do as well and you only earn 10%, you still outpace the person with only $10,000 and you’ll earn $10,000 for the year.

C. OK, let’s say you met your goal of accumulating $1,000,000 and your investments do even worse at 3% for the year. You will still make over $30,000 for the year. If your investments performed well (10%) you will have made an unbelievable $100,000 for that year.

There it is. The 3-step plan for meeting your own personal wealth accumulation plan. Whether it’s $100,000 or $1,000,000; you have the potential to attain your personal wealth accumulation goal as long as you have a compelling reason (a true desire), you make the right personal choices and you take daily actions towards this goal.

Is it easy? - Not necessarily

Is it possible? - Absolutely yes!

Take Action Today!!

First, set aside 30 minutes or 3 days and create a compelling reason to set your own personal net worth goal.

Then, set a specific net worth goal for 3 months, 1 year, 5 years and 10 years. Not sure what your goal should be. It doesn’t matter right now. Just set a goal and change it as needed - you’ll probably change it upward.

Next, take $10 out of your wallet or purse - TODAY - and deposit it into your new “Wealth Accumulation” account. You’ve just now taken the first steps and are now on your way to meeting your goal. You’ll be amazed at what you can accomplish!

To start your wealth building education, there are many great books on the specific subject of accumulating wealth and you can search your local library as an inexpensive and resourceful first action step. In addition, check out some of these titles listed below. You can find these titles and many more online at Amazon.com, Books-a-Million or Barnes & Noble.

The Automatic Millionaire, The Finish Rich Workbook, Smart Couples Finish Rich, Smart Women Finish Rich - by David Bach

Multiple Streams of Income, Creating Wealth, One Minute Millionaire - by Robert Allen

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Rich Dad Poor Dad, Rich Dads Guide to Investing, Own Your Own Corporation, Rich Dads Retire Young Retire Rich, Real Estate Riches - by Robert Kiyosaki

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The Laws of Money, 9 Steps to Financial Freedom, The Road to Wealth, The Courage to be Rich - by Suze Orman

The Truth about Money, Ordinary People Extraordinary Wealth - by Ric Edelman

Secrets of Six Figure Women - by Barbara Stanny

The Savage Truth on Money - by Terry Savage

The Only Investment Guide You’ll Ever Need - by Andrew Tobias

The Millionaire Next Door, The Millionaire Mind - by Thomas Stanley

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The Intelligent Investor - by Benjamin Graham

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